1. Field of the Invention
The present invention relates to a Universal Positive Pay Database method, system, and/or computer useable medium to reduce check fraud and verify checks, other financial instruments and documents.
2. Description of the Prior Art
Paper checks have been ingrained into our society for over one hundred years. Many young people take their first steps into financial adulthood with the opening of their first checking account. Consumers continue to write an average of 25 checks per month. Paper checks give consumers the ability to make purchases and live day to day without carrying around cash. It gives them the freedom to make purchases before deposits are recorded at their bank and earn interest before withdrawals. Unfortunately, all this freedom comes with a price—Check Fraud. With the increase in home computer technology and high quality laser printers, paper checks can be easily created, even to the point of fooling so called experts in the field. Law enforcement agencies have reported that check fraud is the most under-reported white color crime. Estimates range as high as 50 billion annually. Out of the 180 million checks written daily, 1.2 million are fraudulent. That is less than 1%, but enough to amount to a viral and very expensive problem. Federal law enforcement agencies have seen check fraud go from the individual acting alone to gangs acting in concert, stealing millions.
Besides all the fraud possibilities, paper checks are costly for everyone—financial institutions, retailers and ultimately consumers. As the use of paper checks continues to grow at 2-3% annually the problem will not go away, it will only increase. We need a solution encompassing all contact points in the processing of a paper check, a debit card, and a paper debit check, a complete and connective solution that does not just transfer the responsibility of check fraud, but stops the fraud.
Many techniques have been developed to inhibit check fraud, such as Positive Pay, different forms of electronic check verification and electronic check presentment with and without Automated Clearing House (ACH), but none eliminate fraud from the use of paper checks. All of these electronic methods have taken a positive step in the handling of paper checks. Each has made the process more efficient and less costly by not having to handle paper checks. One area where they all fall short is in the elimination of check fraud. Check electronification places the burden of check fraud on the other parties in the process. This may be good for an individual in the process, but not everyone. If a worthless check is processed or an account is closed pre-maturely, someone in the process is responsible.
Positive Pay is a technique where each corporate customer sends an electronic list of their outstanding checks to their financial institution. The corporate customer's financial institution then uses an Issue File to validate each check as it clears the financial institution. The issue File includes parameters associated with the outstanding checks of each corporate customer, such as check amounts, account numbers, routing numbers, check dates, signatures, etc. If a check does not validate correctly—the financial institution requests proper authorization from the corporation on how to handle the check. There are two main problems that exist here: (1) Positive Pay only works with the financial institutions corporate customers. No other entity in the process has knowledge of the Positive Pay matching capabilities. Under this scenario the person presenting the worthless check will receive the money and the merchant or his financial institution is left trying to recover the loss. (2) There are no standards for Positive Pay. Each financial institution implements its own Positive Pay rules and file formats. In essence, each financial institution is creating an island for itself and its corporate customers.
Check electronification means a number of different things, from verifying the check writers' history against a database to transmitting the account and transaction information electronically to a clearinghouse for settlement. The transmission can be as simple as the magnetic ink character recognition (MICR) line of the check to a full image of the check.
Check electronification processes try to verify that funds will be available when the check clears the bank account. The problem is that there is no check electronification process where the whole check processing system has knowledge of the other financial institutions' position. Prior to clearing the check the account could be closed, or funds withdrawn making the check have non-sufficient funds (NSF). The paper check is eliminated in the process, which will save financial institution time and money, however check fraud continues. The verification database is only as good as the information available. A warranty system is sometimes put in place to guarantee the merchant receives his money, hut again someone in the check process will be responsible for the worthless check. The cost of check fraud continues to be passed along the clearing chain, ultimately to the consumer.
Therefore, a need exists for a Universal Positive Pay Database (UPPD) method, system, and/or computer useable medium that can be universally applied in order to result in a more secure authorization system. The related art is represented by the following references of interest.
U.S. Pat. No. 4,109,238 issued Aug. 22, 1978 to Robert V. Creekmore, outlines the use of a check verification system for providing customer operated verification of checks at point of sale locations. The system enables a customer to verify several possible kinds of checking functions, including verification of payroll or government checks as well as certain types of personal checks for cash. The system utilizes a number of local point of use terminals which are operated by the customer and which communicate with a remotely located transaction processor, including a positive file of customers who are entitled to verify checks. The Creekmore patent does not suggest a UPPD method, system, and/or computer useable medium according to the claimed invention.
U.S. Pat. No. 5,237,620, issued Aug. 17, 1993 to David W. Deaton et al., describes a check reader and method for reading a check MICR code having a plurality of fields including a checking account number. A reader head detects a MICR code on a check and generates electrical signals representative of the MICR code. Circuitry omits portions of the MICR code except a predetermined portion thereof, such that the predetermined portion of the MICR code can be detected regardless of its location within the MICR code fields. The Deaton et al. patent does not suggest a UPPD method, system, and/or computer useable medium according to the claimed invention.
U.S. Pat. No. 5,586,222, issued Dec. 17, 1996 to Wei Zhang et al., describes a process for associating and storing an input pattern or two-dimensional pattern with use of associative matrices having the same size as that of an input pattern without converting it into a one-dimensional pattern, wherein the associative matrices are generated from the input pattern so as to maximize the Hamming distance between state invariants which correspond to each different storage pattern, and thereby a power of categorization that corresponds to each storage pattern can be enhanced, thus increasing the storage capability and robustness. The Zhang et al. patent does not suggest a UPPD method, system, and/or computer useable medium according to the claimed invention.
U.S. Pat. No. 5,677,955 issued Oct. 14, 1997 to John Doggett et al. outlines the use of an electronic instrument created in a computer-based method for effecting a transfer of funds from an account of a payer in a funds-holding institution to a payee. The electronic instrument includes an electronic signature of the payer, digital representations of payment instructions, the identity of the payer, the identity of the payee and the identity of the funds-holding institution. A digital representation of a verifiable certificate by the institution of the authenticity of the instrument of the instrument is appended to the instrument.
The Doggett et al. method and apparatus are associated essentially with a bank specific Positive Pay system, as opposed to the Universal Positive Pay Database system according to the claimed invention, wherein all parties are able to verify check register information of a customer, e.g., a payer, at every point along the path of a check clearing process, e.g., at the point of sale, at the payee's bank, at a Federal Reserve Clearing Division or a clearing house, and at the payer's bank. Bank specific Positive Pay systems restrict access by a customer to check register information for the customer. The Doggett et al. patent does not suggest a UPPD method, system, and/or computer useable medium according to the claimed invention.
U.S. Pat. No. 5,801,366 issued Sep. 1, 1998 to Wade L. Funk et al., outlines the use of an automated check processing system which includes an input device receiving checking account information and a check amount of a check provided for payment in a transaction. A transaction database coupled to the input device then electronically receives and stores the checking account information and check amount, which are then downloaded to a power encoder. The power encoder receives checking account information and check amounts for transactions occurring over a predetermined transaction period and then matches the checks with the electronic checking account information and check amounts.
The Funk et al. system is similar to the system described by Doggett et al., in that Funk et al. describes a bank specific Positive Pay system, as opposed to a Universal Positive Pay Database system according to the claimed invention, wherein all parties are able to verify check register information of a customer at every point along the path of a check clearing process. The Funk et al. patent does not suggest a UPPD method, system, and/or computer useable medium according to the claimed invention.
U.S. Pat. No. 6,036,344 issued Mar. 14, 2000 to David M. Goldenberg outlines the use of an apparatus and method for countering fraudulent check cashing schemes that includes a central processing center that is connected to a plurality of banks through secure communication channels. Each check drawn against the banks has information stored therein, with that information corresponding to a plurality of digits and characters for the central processing center. When a check is presented at a bank, the information on the check is sent through one of the secure communication channels to the central processing system, which determines whether or not the account has sufficient funds to allow the check to be drawn against the account. The Goldenberg patent does not suggest a UPPD method, system, and/or computer useable medium according to the claimed invention.
U.S. Pat. No. 6,213,391 B1, issued Apr. 10, 2001 to William H. Lewis, describes a system for identifying an individual by either generating an identification profile based on a distinctive biometric characteristic possessed by that person (e.g. voice analysis, finger print, facial scan. DeoxyriboNucleic Acid (DNA), etc.), or by verifying some digital “signature” representation assigned to that person. The biometric information or digital signature may then be used in a variety of functions to enhance both the security and convenience of conducting electronic transactions. The system may provide an algorithm for creating a personal identification number (PIN) for use as a preliminary or secondary identification steps, and/or an algorithm for generating unique tone codes for use in personal identification via telephone or modem. Further, security of online transactions may be greatly improved by placing access key information in a medium outside the computer host or client. The system further provides a device that facilitates a user's ability to change codes or methods of generating codes instantly, without having to contact their bank, credit card company, etc. The Lewis patent does not suggest a UPPD method, system, and/or computer useable medium according to the claimed invention.
World Intellectual Property Organization (WIPO) Patent Application Publication No. WO 97/055383, published Feb. 13, 1997, describes a method for checking and processing bank checks, wherein a secret code is computed, in the form of a CMC7 code thereof, and from an account number read off a check submitted for payment, by a dedicated chip in a check processing device held by a payee, then compared with a secret code input into the device by the check issuer to determine whether he or she is the rightful account holder. The WIPO '267 application does not suggest a UPPD method, system, and/or computer useable medium according to the claimed invention.
WIPO Patent Application Publication No. WO 97/36267, published Oct. 2, 1997, outlines the use of an automated positive check authorization system that includes an input device for receiving a check amount and checking account information pre-printed on a check drawing on a checking account presented in a transaction at the time of check presentment. The checking account information and check amount are electronically transmitted to a check verifier, which receives the check amount and checking account information from the input device and searches a checking account database for a current balance in the checking account. The WIPO '267 application does not suggest a UPPD method, system, and/or computer useable medium according to the claimed invention.
THE STATE OF UTAH UNIFORM ACCOUNTING MANUAL, revised on Apr. 1, 1997, describes how unclaimed tangible or “custodial property” is to be handled in Utah. THE STATE OF UTAH UNIFORM ACCOUNTING MANUAL does not suggest a UPPD method, system, and/or computer useable medium according to the claimed invention
U.S. Public Law 108-100, 117 STAT. 1177, entitled the “Check 21 Act” (CHECK 21) was signed into law in the U.S. on Oct. 28, 2003, becomes effective on Oct. 28, 2004 (see U.S. Public Law 108-100, 117 STAT. 1177), and is incorporated herein by reference. CHECK 21 fosters innovation in the payments system and enhances its efficiency by reducing some of the legal impediments to check truncation. The law facilitates check truncation by a negotiable instrument called a “substitute check”, which permits banks to truncate original checks, to process check information electronically, and to deliver substitute checks to banks that want to continue receiving paper checks. A “substitute check” is the legal equivalent of the original check and includes all the information contained on the original check. The CHECK 21 law does not require banks to accept checks in electronic form nor does it require banks to use the new authority granted by the act to create substitute checks. The CHECK 21 law does not suggest a UPPD method, system, and/or computer useable medium according to the claimed invention.
None of the above inventions and patents, taken either singly or in combination, is seen to describe the instant invention as claimed.